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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

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BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
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Purchases and cash payments journals

Transactions related to purchases and cash payments completed by Brite Way Cleaning Services Inc. during the month of May 2016 are as follows:

May 1. Issued Check No. 57 to Liquid Klean Supplies Inc. in payment of account, $395.

3. Purchased cleaning supplies on account from Sani-Fresh Products Inc., $220.

8. Issued Check No. 58 to purchase equipment from Carson Equipment Sales, $3,150.

May 12. Purchased cleaning supplies on account from Porter Products Inc., $400.

15. Issued Check No. 59 to Bowman Electrical Service in payment of account, $165.

18. Purchased supplies on account from Liquid Klean Supplies Inc., $275.

20. Purchased electrical repair services from Bowman Electrical Service on account, $150.

26. Issued Check No. 60 to Sani-Fresh Products Inc. in payment of May 3 invoice.

31. Issued Check No. 61 in payment of salaries, $6,500.

Prepare a purchases journal and a cash payments journal to record these transactions. The forms of the journals are similar to those illustrated in the text. Place a check mark (✓) in the Post. Ref. column to indicate when the accounts payable subsidiary ledger should be posted. Brite Way Cleaning Services Inc. uses the following accounts:

Cash 11
Cleaning Supplies 14
Equipment 18
Accounts Payable 21
Salary Expense 51
Electrical Service Expense 53

To determine

Purchase journal

Purchase journal refers to the journal that is used to record all purchases on account. In the purchase journal, all purchase transactions are recorded only when the business purchased the goods on account. For example, the business purchased cleaning supplies on account.

Cash payments journal

Cash payments journal refers to the journal that is used to record the all transaction which is involve the cash payments. For example, the business paid cash to employees (salary paid to employees).

Accounts payable control account and subsidiary ledger

Accounts payable account and subsidiary ledger is the ledger which is used to post the creditors transaction in one particular ledger account. It helps the business for locate the error in the creditor ledger balance. After all transactions of creditor accounts are posted, the balances in the accounts payable subsidiary ledger should be totaled, and compare with the balance in the general ledger of accounts payable. If both the balance does not agree, the error has been located and corrected.

Subsidiary ledger

Subsidiary ledger refers to the ledger that provides the detailed information of the account already recorded in the general ledger such as accounts receivable subsidiary ledger and accounts payable subsidiary ledger.

To prepare: A purchase journal and cash payment journal to record the transactions.

Explanation

The transactions which are purchased on account have been posted in the purchase journ...

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